Monday, 12 September 2016

Hillary Clinton and the Optics of Decline

In terms of optics, the past few days have signaled a
downturn for Hillary Clinton’s campaign. This downturn reflects many of the
symptoms of the political class. And unfortunately, it signals yet another
reason why the United States faces incredible challenges in the near future.

"To just be grossly generalistic, you can put
half of Trump supporters into what I call the basket of deplorables,"
Clinton said. "Right? Racist, sexist, homophobic, xenophobic,
Islamaphobic, you name it."

She added: "And unfortunately, there are
people like that and he has lifted them up. He has given voice to their
websites that used to only have 11,000 people, now have 11 million. He tweets
and retweets offensive, hateful, mean-spirited rhetoric."

However true this may be (or appear to be), it is an
unfortunate thing to say. Right up there with Mitt
Romny’s 47% comment. Also made at a fundraising speech.

It is important to remember that Trump and his surrogates
have been encouraging supporters to “lock
her up” and, in some cases, to execute her. I haven’t seen an equivalent
apology from Donald Trump about this, even though the chants take place at his
rallies, at his prompting.

The last thing a presidential candidate should do is appear
weak. The second-to-last-thing a candidate should to is insult the voters of
the other side.

Yet this is what is happening on a daily basis in this electoral
campaign. It frames the terms of the debate. It establishes perception, which
may be far removed from any facts.

Elections are
Perception. They Distort Reality. Then they Define It.

Events like this begin to frame a larger narrative. It’s
clear that the political class in most western countries today has several
common features:

·Elections are fought on perception, not fact;

·Average voters appear to suspend any form of
critical thinking or historical memory, and accept political lies;

·The political class apparently feels empowered
to say one thing in smaller, campaign fundraising events, and another thing in
public;

·I have yet to see any politician or political
party offer a comprehensive policy analysis and means-tested solution to the
very real problems of flagging productivity, declining competitiveness,
demographic decline, fiscal distortion and other critical issues.

Unfortunately, this trend has now spread to the largest
economy in the world (in real terms). It has long been there, but the
Trump-Clinton election marks a watershed of political failure that will define
the new normal for generations to come.

United States
Exceptionalism

The United States is, once again, an exception. But not in a
positive way. In many respects, it appears to be a frontrunner of political and
economic decline among developed nations. It is not unique in this.

The public debt situation in the United States is
deliberately concealed, with Federal debt reported, with very real and tangible
debts of key governmental organisations (Fannie Mae / Freddie Mac), state and
local government and mandatory unfunded liabilities (Medicare, Medicaid, Social
Security) on the books, but not reported in a consolidated format. This is a
widely-known and accepted fiction, which cannot continue without high and
unsustainable costs.

Federal spending is only being kept low through artificially
low interest rates (ZIRP), which reduce interest expenditure, and through
non-consolidation of total public debt.

Economic inequality
is now at historic levels. 90% of US households earned $ 33,068 or less per
year in 2014. Most working families on minimum wage (or even 50-75% above
minimum wage) are essentially wage slaves, unable to meet basic demands.

The Affordable Healthcare Act has removed
any semblance of price discipline on suppliers through collective bargaining—due
mainly to Republican and Democratic resistance to a single payer system. US
basic healthcare remains among the most expensive in the world, for some of the
poorest health outcomes on record. The very fiscal prudence that Republicans
espouse for the private sector is ignored in the public sector, mainly due to lobbying.
The pernicious effects of this are all too obvious.

The US is possibly the only country where key law
enforcement (sheriffs)
and justice officials (judges)
are elected this widely. Where they must collect campaign contributions to win
an election. And where they must then sit in a regulatory or enforcement
position on the very people who paid to elect them.

US GDP and employment figures are distorted (favourably) by
2-3 key sectors. These distortions extend into tax revenue and policy. A
further distortion is seen in the role of the US dollar as a global currency,
and in US Treasuries as a reserve of value.

There is a general political inability to craft sustainable
and rational policy responses to key sectors such as public finance, the
overall financial sector, electoral reform (at state and federal levels), justice,
gun control and registration, healthcare spending, education, manufacturing and
trade policy, and immigration. In the absence of meaningful reform, costs rise
and competitiveness declines.

Informed observers must look beyond the latest scandalous
comment made by Trump or Clinton, to the abject politicization of elected
officials and electoral systems from the local level all the way up to the
Presidency.

The United States has some of the most unique strengths and
advantages in the world. It has made incredible contributions in every sector.
It is the oldest functioning, continuous democracy and remains a country where
innovation and entrepreneurship thrive despite increasingly expensive mandatory
costs and distortions: primarily healthcare and legal.

Unfortunately, none of these positive attributes appear to
be reflected in the political system. And politics is, arguably, destroying
them.

I am hoping, perhaps against all hope, that the political
system will miraculously find a way to stop the decline. But I see few
indications of this, and certainly none that are ticking away as fast as the consolidated
debt clock.

As mentioned at the start: the US is a frontrunner, but it
is not unique. The same trends are clear in nearly every other industrialised
democracy in the world today.

The question is not why the metaphorical train wreck will
happen. The question is when.

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